Record Wall Street Private Credit Deal: Meta Partners with Blue Owl in $27bn Data Center Venture

TradingKey - Meta announced on Tuesday that it has entered into a joint venture agreement valued at up to $27 billion with Blue Owl Capital to fund and develop its Hyperion data center project in rural Louisiana, United States.

Under the terms of the agreement, Blue Owl Capital will hold an 80% controlling stake in the joint venture, while Meta will retain a 20% stake and be responsible for construction oversight and subsequent property management services.

Doug Ostrover and Marc Lipschultz, Co-CEOs of Blue Owl Capital said, "We're proud that our funds are partnering with Meta on the development of the Hyperion data center campus—an ambitious project that reflects the scale and speed required to power the next generation of AI infrastructure."

“Our partnership with Blue Owl Capital to develop the Hyperion Data Center is a bold step forward — combining Meta’s deep expertise in building and operating world-class data centers with Blue Owl’s strength in infrastructure investment,” Meta Chief Financial Officer Susan Li said.

This transaction sets a record for the largest deal ever in the private credit sector, signaling a shift in financing strategies among tech giants — particularly those aggressively building AI infrastructure.

Previously, these companies typically paid upfront for data center development, which often significantly drained their free cash flow. Meta's choice of a joint venture model allows it to secure funding for the project off its balance sheet, similar to the approach Intel used last year when financing its $11 billion chip factory in Ireland through a partnership with Apollo Global Management.

This type of asset-based financing, where a financial security is collateralized by a pool of assets — in this case, the future lease payments from Meta — has become an increasingly popular way to fund data-center buildouts, Jeffery Foster, finance professor at Georgetown, said.

The $27 billion bond issuance was arranged by Morgan Stanley and, despite receiving an A+ investment-grade rating from S&P Global Ratings, offers a yield of 6.58% — a level approaching that of junk bonds.

According to sources familiar with the matter, bond giant Pacific Investment Management Company (Pimco) was the largest buyer of the bonds, purchasing $18 billion worth. Asset management giant BlackRock purchased over $3 billion, making it the second-largest investor.

Compared to traditional debt instruments, such private credit arrangements offer hyperscale companies a faster and more flexible financing option, though typically at a higher cost.

The deal terms also include additional investor protections: Meta has provided a guarantee to the joint venture that the property will maintain a minimum value for the first 16 years. This means that if Meta decides to terminate the lease and the market value of the data center falls below the guaranteed amount at that time, Meta must pay the joint venture the difference to cover the loss.

For Blue Owl, the data center itself serves as solid collateral, while Meta's lease payments constitute a stable primary revenue stream. Meanwhile, Meta gains access to a completed facility without having to pay the full $27 billion construction cost upfront.

"It definitely helps them mitigate risks at the expense of its ownership stake. Meta won't need to provide nearly as much capital and can look to finance other facilities or AI infrastructure," said Alvin Nguyen, senior analyst at Forrester.

"It also minimizes the debt they are taking on for equipment and property in the event there is a bursting of the AI bubble."